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El-Rufai attacks CBN interest rate, says FG may force it down

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El-Rufai imposes fresh 24-hour curfew in troubled S’Kaduna
The Governor of Kaduna State, Nasir el-Rufai, Wednesday, came hard on the decision of the Central Bank of Nigeria to increase its Monetary Policy Rate, MPR, from 12 to 14%, saying it does not make sense.
He also said government may be forced to bring down the rate through legislation.
The MPR is rate at which the CBN, in performing its role as a lender of last resort, lends to Deposit Money Banks to boost the level of liquidity in the banking system and the economy.
However the increase by the CBN has led to increase of interest rates by  banks in the country to between 28 and 30%. Before the CBN action, the banks rates hovered around 25%.
According to El-Rufai, who spoke at a forum organised in Abuja by the Women in Business, the high interest rate prescribed by the CBN has been largely responsible for massive job losses in the country.
Faulting the apex bank’s position that it wanted to cut down on the current inflation rate in the country, el-Rufai that while inflation in the United Kingdom was between seven and eight per cent, while the lending rate was currently one per cent.
He said: “We have a central bank that has an MPR at what? Fourteen per cent, and banks lending at 20 per cent. Only traders and drug dealers can make money at this interest rate.
“I have said it before and I will repeat it again, unless the central bank and the banking system make a conscious decision to bring the interest rate down, one day we will legislate it.
“The rate of inflation in the UK is not two per cent or one per cent. It is seven to eight per cent. But lending rate is at one per cent. I think they cut the interest rate last week.”
The governor who said the CBN’s theory that the rate of interest must always be above the inflation rate did make sense, argued that the country could always decide the interest rate that would stimulate business activities.
“We must decide that businesses should be able to borrow at the interest rate that makes sense and politically lower rates to that level,” he added.
By Timothy Enietan-Matthews
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